Buy alert: TSX trader raises dividend 8% after 22% profit surge
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the Toronto Stock Exchange exploded in December 2021 and did not reach its best return of +30.69% in 2009, the year post-financial crisis. Nonetheless, it was a profitable year for investors, given the overall gain of 21.74%. The index did not lose in 2020, although the yield fell to 2.17% from 19.13% in 2019.
If you’re looking for a value stock with visible growth potential, the operator of global markets, including the TSX, deserves a second look. Due to the beautiful end of 2021, TMX Group (TSX:X) announced on February 8, 2022 an 8% increase in its quarterly dividend effective March 11, 2022.
Group CEO John Mckenzie said: “TMX’s strong results for 2021, highlighted by double-digit growth in revenue and earnings per share, reflect an extraordinary year for clients raising capital on our markets and the strength of our business model. Besides potential price appreciation over the next several quarters, there is plenty of room for dividend growth.
In the fourth quarter of 2021, revenue and net income increased 15% and 22% compared to the fourth quarter of 2020. For the full year of 2021, the $7.25 billion company reported growth in revenue and net profit by 13% and 21%, respectively, compared to the full year. 2020. Notably, cash flow from operating activities increased 7% year over year to $441.4 million.
TMX Group Chief Financial Officer, David Arnold, said, “We are pleased to have achieved very strong financial results over the past quarter. Growth was solid despite slightly lower trading income from equities and fixed income.
Arnold added that mid-teens revenue growth led to 24% growth in diluted earnings and adjusted diluted earnings per share. He further stated, “Given our continued strong performance, our Board of Directors has increased the quarterly dividend by 8% to 83 cents per common share, consistent with our target payout range.”
At $129.85 per share, current investors enjoy a 1.2% year-to-date gain on top of the 2.61% dividend yield. According to market analysts’ forecasts, the stock could appreciate between 13.6% ($146.86) and 19.9% ($155) in 12 months.
Best year for the TMX
McKenzie confirmed that 2021 was the best year ever for the TMX. The TSX has raised $60 billion and the capital formation industry has helped many companies access capital. In addition to favorable funding conditions, most new listings, especially tech issues, were of high-quality companies, McKenzie said.
During the COVID year, capital flows to energy companies, whether junior or senior, were close to zero until commodity prices started to rise. While the tech sector underperformed or passed its peak last year, stocks have remained historically strong.
McKenzie pledged, “As we move forward into 2022, TMX is focused on building our larger markets even stronger.” The company will innovate and adapt to meet changing market needs. It should accelerate its global growth strategy.
Take away key
The main conclusion is that you would invest in a defensive financial firm. According to recent data, TSX trading volume in January 2022 is 15.1% lower than the same month in 2021. However, expect it to accelerate as the year progresses. Some market analysts say the stock is way undervalued for its quality. If the market remains strong, TMX has a strong tailwind.